Money Markets - How Safe?

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SteveR's picture
SteveR
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Money Markets - How Safe?

Can anyone comment on how safe money markets are, as a way to store cash?  In particular, how safe are the money market sweep accounts that are attached to brokerage accounts?

My financial life is already overly-complex, so I am loath to open yet another bank account to spread risk.  However, I have several brokerage accounts - each with a money market sweep account, all ready to go, with no extra paperwork involved.

Thanks.

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Re: Money Markets - How Safe?

Just make sure they are US Treasury-only money market accounts and you should be safe...with safe being a relative term here.

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Re: Money Markets - How Safe?

They're probably safe but just remember that anything with the word "fund" after it can lose principal.  In fact, this past year, for the first time, a money market fund "broke the buck" (i.e. lost principal).  I agree with Jeff about US Treasury money market accounts.  That is where I have the largest amount of liquid cash.  The only problem is, more and more of them are closing to new investors.  Schwab had closed theirs quite a while ago and more recently, Vanguard closed theirs to outside investors as well.  I think U.S. Global Investors and Fidelity both have these funds and maybe, Martin Weiss, but I'm not sure if these are open.  Remember also, money market funds are different from money market savings accounts.     

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Re: Money Markets - How Safe?
SteveR wrote:

Can anyone comment on how safe money markets are, as a way to store cash?  In particular, how safe are the money market sweep accounts that are attached to brokerage accounts?

My financial life is already overly-complex, so I am loath to open yet another bank account to spread risk.  However, I have several brokerage accounts - each with a money market sweep account, all ready to go, with no extra paperwork involved.

Thanks.

Hi Steve:

The FDIC is broke, can't even close the troubled banks. The big banks have 175 trillion in shadow toxic waste. The dollar is weakening.

If it tanks do you even want your money in the dollar?

I have faith in the 3 G's. One is religious so I won't say it, the other is Gold, the last is the Government has and will continue to jack things up.

The dollar and the government are one.

The deficits force Ben to create money out of thin air, they failed miserably as regulators allowing us to get in this mess, they looted Social Security for the bread and circus elections.

This financial stuff is a melodramatic attention whore, I know. The bottom line is they (for the past almost 100 years) have gone berserk and now they will tank the system. That is my 2 cents. Rome's currency is about to burn.

 

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Re: Money Markets - How Safe?

Hi,

Davos, here is another turn on the ratchett -

Texas bank hit by California dreaming

Although the failure of Austin-based Guaranty Bank looms, its problems reflect the housing bubble in the Golden State rather than issues at home.

NEW YORK (Fortune) -- Bank regulators have a Texas-sized problem on their hands -- though it's easy to see much of the trouble resides farther west.

Guaranty Bank, an Austin-based savings institution with $13.5 billion in assets, is expected to be seized by the FDIC by the end of the week. According to multiple reports late Wednesday, Spanish bank Banco Bilbao Vizcaya (BBV) has won the bidding for Guaranty.

Representatives for the FDIC and Guaranty were not immediately available for comment.

Guaranty's (GFG) closing would mark the second-biggest bank failure of 2009, after last week's collapse of Alabama's Colonial Bank, which was seized by the FDIC and sold to regional bank BB&T (BBT, Fortune 500).

Guaranty reiterated Monday that it doesn't expect to survive following its failure to raise new capital. The bank lost $174 million in the second quarter, according to its latest quarterly report to the Office of Thrift Supervision.

I know that you have been watching FDIC's holdings evaporate - this would put them over, correct?

Do they simply monitize the cost via government loan guarantees or are we at the end as far as insurnce on deposits, CDs, etc?

Larry

 

 

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Re: Money Markets - How Safe?

I think I read they the FDIC has like a 500bn line of credit with the Treasury, don't recall if Congress has to approve, likely so. I'm a little weak in this arena, take care

PS I did read that Georgia alone has about 100 banks that will likely close. On this link there is an interactive of the banks that are in trouble. The 500 bn if I have that number right won't go far.

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Re: Money Markets - How Safe?

Link

 

 
THE MYTHICAL FDIC FUND
By William M. Isaac

William Isaac, former Chairman of the Federal Deposit Insurance Corporation, (FDIC)


…When I became Chairman of the FDIC in 1981, the FDIC's financial statement showed a balance at the U.S. Treasury of some $11 billion. I decided it would be a real treat to see all of that money, so I placed a call to Treasury Secretary Don Regan:

Isaac: Don, I'd like to come over to look at the money.
Regan: What money?
Isaac: You know . . . the $11 billion the FDIC has in the vault at Treasury.
Regan: Uh, well you see Bill, ah, that's a bit of a problem.
Isaac: I know you're busy. I don't need to do it right away.
Regan: Well . . . it's not a question of timing . . . I don't know quite how to put this, but we don't have the money.
Isaac: Right . . . ha ha.
Regan: No, really. The banks have been paying money to the FDIC, the FDIC has been turning the money over to the Treasury, and the Treasury has been spending it on missiles, school lunches, water projects, and the like. The money's gone.
Isaac: But it says right here on this financial statement that we have over $11 billion at the Treasury.
Regan: In a sense, you do. You see, we owe that money to the FDIC, and we pay interest on it.
Isaac: I know this might sound pretty far-fetched, but what would happen if we should need a few billion to handle a bank failure?
Regan: That's easy - we'd go right out and borrow it. You'd have the money in no time . . . same day service most days.
Isaac: Let me see if I've got this straight. The money the banks thought they were storing up for the past half century - sort of saving it for a rainy day - is gone.
If a storm begins brewing and we need the money, Treasury will have to borrow it. Is that about it?
Regan: Yep.
Isaac: Just one more thing, while I've got you. Why do we bother pretending there's a fund?
Regan: I'm sorry, Bill, but the President's on the other line. I'll have to get back to you on that.

I don’t know whether Treasury Secretary Don Regan ever answered Isaac’s question, Why do we bother pretending there's a fund? But the answer is obvious. Modern economics, i.e. central banking, is a shell game, a shell game where bankers with the aid of governments have foisted a highly lucrative fraud on society; and, while the fraud of the FDIC fund is egregious, it is no more egregious than the fraud of the Fed or of the economy itself.

In economies based on the fraudulent issuance of money as debt, there are only predators and victims. Bankers are the predators, society is the victim (businessmen are victims who often believe they’re predators) and governments are the well-paid-off referees in the rigged game being played out in today’s capital markets.

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Re: Money Markets - How Safe?
Davos wrote:

If it tanks do you even want your money in the dollar?

I have faith in the 3 G's. One is religious so I won't say it, the other is Gold, the last is the Government has and will continue to jack things up.

The dollar and the government are one.

The deficits force Ben to create money out of thin air, they failed miserably as regulators allowing us to get in this mess, they looted Social Security for the bread and circus elections.

Davos,

I think it might be time to purchase a TV. Perhaps too much time in the blogosphere can be harmful. You might want to balance it with some Reality TV !!! Surprised

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Re: Money Markets - How Safe?
JAG wrote:
Davos wrote:

If it tanks do you even want your money in the dollar?

I have faith in the 3 G's. One is religious so I won't say it, the other is Gold, the last is the Government has and will continue to jack things up.

The dollar and the government are one.

The deficits force Ben to create money out of thin air, they failed miserably as regulators allowing us to get in this mess, they looted Social Security for the bread and circus elections.

Davos,

I think it might be time to purchase a TV. Perhaps too much time in the blogosphere can be harmful. You might want to balance it with some Reality TV !!! Surprised

Hello Jeff:

We had TV in our old house and my wife and the kids turned on "Survivor" while we were eating dinner one night. If reality is watching someone vomit after eating worms while I'm eating pasta and sausage - thanks but no thanks. After that it was Survivor on nights when Dad was on a trip.

TV IMHO is and has been responsible for 90% of the decay. The rest of the cancer that has infected us is 5% media and 5% schooling. No offense to teachers, I come from a line of them and I taught.

I'm glad the TV is gone, I'd rather go to internet detox than become or raise boobalings.

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Re: Money Markets - How Safe?

 

Davos wrote:

Hello Jeff:

We had TV in our old house and my wife and the kids turned on "Survivor" while we were eating dinner one night. If reality is watching someone vomit after eating worms while I'm eating pasta and sausage - thanks but no thanks. After that it was Survivor on nights when Dad was on a trip.

TV IMHO is and has been responsible for 90% of the decay. The rest of the cancer that has infected us is 5% media and 5% schooling. No offense to teachers, I come from a line of them and I taught.

I'm glad the TV is gone, I'd rather go to internet detox than become or raise boobalings.

ROCK ON BROTHER, ROCK ON!!

Amen to that.

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Re: Money Markets - How Safe?

What, Reality TV is not Reality?

I'm going to have to tell my sheeple about this.

Davos,

I hope you know that I was joking. 

Thanks for all the good work that you do.

Jeff

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Re: Money Markets - How Safe?
Morpheus wrote:

Amen to that.

Says the Man who goes buy the name of a fictional character in a movie.

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Re: Money Markets - How Safe?
JAG wrote:

What, Reality TV is not Reality?

I'm going to have to tell my sheeple about this.

Davos,

I hope you know that I was joking. 

Thanks for all the good work that you do.

Jeff

Agh, now I get it! Cool

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Re: Money Markets - How Safe?

Davos,

Thanks for your post on TV.   I guess we all know that there is unfairness, crime, weird behavior, unnecessary conflicts,  and all kinds of sex in the world.  But I fail to see the value of putting that stuff in front of us, and our kids, all the time.  I don't know about you, but I have television so I can be exposed to various viewpoints on world affairs.  I also have television so I can get exposed to some cultural events that I could never see, because of their distance from me.  I also have television because I enjoy being entertained with wholesome programming that deals with life's issues in positive ways that show how some major issues might be solved.  And finally, I have television because I enjoy watching some sports with my 97-year-old dad, who lives with me and that's about all that he can enjoy, given his physical condition, eyesight, etc.

And lastly, I can figure out what's coming on, in advance, and avoid the stuff that I, personally, consider worthless to the betterment of society.

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Re: Money Markets - How Safe?
Ben A wrote:

Davos,

Thanks for your post on TV.   I guess we all know that there is unfairness, crime, weird behavior, unnecessary conflicts,  and all kinds of sex in the world.  But I fail to see the value of putting that stuff in front of us, and our kids, all the time.  I don't know about you, but I have television so I can be exposed to various viewpoints on world affairs.  I also have television so I can get exposed to some cultural events that I could never see, because of their distance from me.  I also have television because I enjoy being entertained with wholesome programming that deals with life's issues in positive ways that show how some major issues might be solved.  And finally, I have television because I enjoy watching some sports with my 97-year-old dad, who lives with me and that's about all that he can enjoy, given his physical condition, eyesight, etc.

And lastly, I can figure out what's coming on, in advance, and avoid the stuff that I, personally, consider worthless to the betterment of society.

I can't argue that. When we built our house I'd come back from the jobsite to the little rental and veg in front of TV. I enjoyed a few good shows. Rose, Learman (?SP), History Chanel. I'd watch how to flip that home to reassure myself that I still had a few months to sell the land I subdivided before the crash. But I have to confess, there were times where I started to veg in front of some brainless stuff. Worse, if we were busy the kids would gravitate towards some content that seemed violent and mind numbing. They also got the "buys" real bad. Going to the store then vs now is like night and day.

Please don't get me wrong. TV is a personal choice. I hope I didn't offend anyone, my views on TV for myself are very stark. There really are a few shows that I miss and can't NetFlix. And I could live in the movies. TV just ins't for me or us. I don't hold it against anyone who likes it. I do question if the bad content doesn't leak into society.

And not to beat the horse to death, but after I built our first home in Virginia a few folks at the airlines asked where I found the time. When I gave thought to that question I realized I was spending more time (pre house construction) in front of the TV than at work. When I was done builidng I decided we had enough TV.

 

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Re: Money Markets - How Safe?

Davos,

Because you don't have a TV, I know you must have missed this on ABC News last night, so I'll enlighten you with the top stories:

  1. The Recession is Over....Bernanke saved the world.
  2. The Housing Market has recovered.
  3. The Swine Flu will become the greatest plague in the history of mankind this fall.
  4. Hurricane Bill, though not expected to make landfall, should be greatly feared by all of those on the east coast.
  5. Distinguishing between the male and female sex is difficult to accomplish with genetic testing.

And to think that you could exist without a TV....

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Re: Money Markets - How Safe?
JAG wrote:

Davos,

Because you don't have a TV, I know you must have missed this on ABC News last night, so I'll enlighten you with the top stories:

  1. The Recession is Over....Bernanke saved the world.
  2. The Housing Market has recovered.
  3. The Swine Flu will become the greatest plague in the history of mankind this fall.
  4. Hurricane Bill, though not expected to make landfall, should be greatly feared by all of those on the east coast.
  5. Distinguishing between the male and female sex is difficult to accomplish with genetic testing.

And to think that you could exist without a TV....

Wow, based on that good news, I'm going to:

  1. Not finish my scathing letter to Ben
  2. Go back into the real estate market, re-enter longs in the market
  3. Ensure I get some untested vacinne developed by the compnay who accidentaly realesed the H5N1 live virus in a vaccine
  4. Be scared
  5. Have Marsha genetically tested

Oh, and buy 3 TV's

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ao
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Re: Money Markets - How Safe?

The sad thing is, there are those individuals who actually believe reality TV is spontaneous and unscripted ... perhaps the same ones who got ARMs.;-)

Davos,

LOL with regards to not raising boobalings.  I agree 100%.  The years I had no TV and watched no TV were the most productive in my life.  I've just about evolved back in that direction again.  The wife is almost convinced as well but the kids are a harder sell. 

Mother Earth News had a lengthy article years ago on the multiple negative aspects of watching TV.  There were virtually no positive aspects.  It's truly an idiot spawning medium. 

In addition to ending the Fed and ending our reliance on consumer credit, ending TV watching would go a long ways towards improving things in our world.  It's interesting that David Grossman has said there is a consistent global pattern of violence rising within about 15 years of TV's introduction into a geographic locale.   Seems to make us both dumb and dangerous. 

 

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